Sources of Comparative Advantage in Polluting Industries

Fernando Broner, Vasco Carvalho and Paula Bustos ()

No 9111, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We study the determinants of comparative advantage in polluting industries. We combine data on environmental policy at the country level with data on pollution intensity at the industry level to show that countries with laxer environmental regulation have a comparative advantage in polluting industries. Further, we address the potential problem of reverse causality. We propose an instrument for environmental regulation based on meteorological determinants of pollution dispersion identified by the atmospheric pollution literature. We find that the effect of environmental regulation on the pattern of trade is causal and comparable in magnitude to the effect of physical and human capital.

Keywords: International trade; Environmental regulation; Comparative advantage; Air pollution (search for similar items in EconPapers)
JEL-codes: F11 F18 Q53 Q56 (search for similar items in EconPapers)
Date: 2012-09
New Economics Papers: this item is included in nep-ene, nep-env, nep-int and nep-res
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Citations: View citations in EconPapers (83)

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Related works:
Working Paper: Sources of Comparative Advantage in Polluting Industries (2015)
Working Paper: Sources of Comparative Advantage in Polluting Industries (2012)
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